Question
Exercise 9-48 (Static) Activity-Based Costing: Cost Flows through T-Accounts (LO 9-5, 7) Southwest Components recently switched to activity-based costing from the department allocation method.
Exercise 9-48 (Static) Activity-Based Costing: Cost Flows through T-Accounts (LO 9-5, 7) Southwest Components recently switched to activity-based costing from the department allocation method. The Fabrication Department manager has estimated the following cost drivers and rates: Activity Centers Materials handling Quality inspections Machine setups Running machines Cost Drivers Pounds of material handled Number of inspections Number of machine setups Number of machine-hours $ Rate per Cost Driver Unit 36 per pound $ 450 per inspection $5,400 per setup $ 45 per hour Direct materials costs were $600,000 and direct labor costs were $300,000 during July, when the Fabrication Department handled 3,000 pounds of materials, made 500 inspections, had 25 setups, and ran the machines for 10,000 hours. Required: Use T-accounts to show the flow of materials, labor, and overhead costs from the four overhead activity centers through Work-in- Process Inventory and out to Finished Goods Inventory. Beg bal Materials Inventory Beg bal. Wages Payable End. bal End bal Overhead Applied: Materials Handling Beg bal Overhead Applied: Quality Ins Beg bal Exercise 9-48 (Static) Activity-Based Costing: Cost Flows through T-Accounts (LO 9-5, 7) Southwest Components recently switched to activity-based costing from the department allocation method. The Fabrication Department manager has estimated the following cost drivers and rates: Activity Centers Materials handling Quality inspections Machine setups Running machines Cost Drivers Pounds of material handled Number of inspections Number of machine setups Number of machine-hours $ Rate per Cost Driver Unit 36 per pound $ 450 per inspection $5,400 per setup $ 45 per hour Direct materials costs were $600,000 and direct labor costs were $300,000 during July, when the Fabrication Department handled 3,000 pounds of materials, made 500 inspections, had 25 setups, and ran the machines for 10,000 hours. Required: Use T-accounts to show the flow of materials, labor, and overhead costs from the four overhead activity centers through Work-in- Process Inventory and out to Finished Goods Inventory. Beg bal Materials Inventory Beg bal. Wages Payable End. bal End bal Overhead Applied: Materials Handling Beg bal Overhead Applied: Quality Ins Beg bal
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